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FORMER EMPLOYEES MUST ARBITRATE ADEA CLAIMS ON INDIVIDUAL BASIS (Thursday, June 15, 2017)

In June 2012,
General Mills announced it was terminating about 850 employees. General Mills
offered them severance packages in exchange for signing release agreements. By
the agreements’ terms, employees released General Mills from all claims
relating to their terminations—including, specifically, ADEA claims. The
agreements also stated that claims covered by the agreements would be
individually arbitrated:

[I]n the event there is any dispute or
claim arising out of or relating to the above release of claims, including,
without limitation, any dispute about the validity or enforceability of the
release or the assertion of any claim covered by the release, all such disputes
or claims will be resolved exclusively through a final and binding arbitration
on an individual basis and not in any form of class, collective, or
representative proceeding.

Thirty-three
employees who signed releases sued and requested a declaratory judgment that
the releases were not “knowing and voluntary.” They also brought collective and
individual ADEA claims.

General Mills
moved to dismiss and compel arbitration on an individual basis. The district
court denied the motion, and General Mills appealed.

The appeals court
noted that in moving to compel arbitration of the former employees’ ADEA
claims, General Mills did not assert the validity of a waiver of “the statutory
right to be free from workplace age discrimination.” Section 626(f) of the ADEA
is not a “contrary congressional command” overriding the Federal Arbitration
Act’s mandate to enforce agreements to arbitrate ADEA claims. Since the
agreements required individual arbitration of the former employees’ ADEA
claims, the district court should have granted General Mills’ motion as to
those claims.

The former
employees contended that the issue for declaratory judgment—whether the
purported waivers of their substantive ADEA claims were “knowing and voluntary”
under § 626(f)(1)—was not arbitrable.

The appeals court
observed that the “controversies” here were not whether the former employees
waived their substantive ADEA rights. Rather, the “controversies” were the ADEA
claims themselves, which the declaratory judgment action would not resolve. If
the former employees won, they would still have to arbitrate the merits of the
claims. If the former employees lost, they could still sue General Mills so
long as General Mills did not raise waiver as an affirmative defense. Under the
circumstances, the district court did not have jurisdiction over the former
employees’ declaratory judgment claim.

On remand, the district
court was directed to dismiss the former employees’ declaratory judgment claim
for lack of jurisdiction, and to grant General Mills’ motion to compel individual
arbitration of the remaining substantive ADEA claims. The case is McLeod v. General Mills, Inc.,856 F.3d 1160 (8th
Cir. 2017).